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Athabasca Basin and beyond

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Forum to acquire 100% of Agnico Eagle’s North Thelon claims

A deal with Agnico Eagle Mines TSX:AEM will allow Forum Uranium TSXV:FDC to “consolidate” its North Thelon project in Nunavut. Under the purchase and sales agreement announced February 6, Forum gets Agnico’s Judge Sissons and Schultz Lake claims for $250,000 cash, 675,000 shares and a 2% NSR. As a result, Agnico’s stake in Forum will rise to 4%.

Uranium news from Saskatchewan and elsewhere for February 1 to 7, 2014

About 50 kilometres east of Forum’s North Thelon
project lies the Nunavut hamlet of Baker Lake.

Already with a 51% option on the Agnico claims, Forum drilled them in 2008 and 2011, finding the Judge and Ranger discoveries. Totalling 21,497 hectares, the claims sit 300 metres from the mill site proposed for AREVA’s Kiggavik mine, now undergoing environmental assessment. North Thelon comprises 197,300 hectares including the Agnico claims and two Inuit-owned land parcels. The package is also adjacent to Cameco’s Aberdeen and Turqavik projects.

Forum also reported an amended exploration agreement with Nunavut Tunngavik Inc that releases the explorer from earn-in work obligations on the Inuit-owned land until 2016.

Cameco increases production slightly but drops long-term target

Uranium’s “uncertainty has lasted for longer than had been expected,” stated Cameco’s February 7 quarterly report, “and this year we’ve moved away from our production target of 36 million pounds by 2018.”

But the underachieving commodity, currently calculated at $35.50 by Ux Consulting, hasn’t discouraged Cameco’s view of the future, “when certainty and growth return to the market over the long term.”

Stunted growth notwithstanding, Cigar Lake is still scheduled for Q1 production and McClean Lake for processing in Q2. This year’s guidance ranges between 23.8 million and 24.3 million pounds U3O8, a bit above last year’s total of 23.6 million. Net earnings came to $318 million or $0.81 a share, compared with $253 million or $0.64 in 2012.

Meanwhile the company’s Port Hope Conversion Facility remains closed by request of the Canadian Nuclear Safety Commission. One of only four such plants in the Western world, Port Hope converts purified uranium trioxide (UO3) into uranium hexafluoride (UF6) and uranium dioxide (UO2) as part of the fuel production process. The CNSC has called for corrective measures after a January 31 shutdown attributed to an unsafe valve configuration.

In late January Cameco announced it was selling its 31.6% interest in Bruce Power, Ontario’s nuclear energy supplier.

Paladin suspends production at Malawi mine

Uranium’s recalcitrant price has had a harsher effect on Paladin Energy’s TSX:PDN Kayelekera mine in Malawi, now on care and maintenance. Cost-cutting measures failed to offset post-Fukushima losses, the company announced February 7. The suspension entails “preserving the remaining value of the ore body until it can be mined profitably,” said managing director/CEO John Borshoff.

Although several pre-Fukushima long-term deals provided some relief, the Kayelekera mine “delivered its last product under these contracts in September 2013. Subsequent uranium produced from KM is now fully exposed to the depressed uranium spot market,” the news release added.

In the last quarter Kayelekera’s production came to 777,015 pounds, 8% below expectations. The government of Malawi owns 15% of the mine.

In January, after several months of efforts, the company sold a 25% stake in its flagship Namibian mine, Langer Heinrich, to China National Nuclear Corp. The same month Paladin convinced lenders to refinance its two mines with annual payments for 2014 cut from US$53.8 million to $18.3 million, an amount that would be further reduced the following year.

Borshoff has repeatedly argued that uranium prices must rise dramatically to ensure future supply.

Niger wants better deal as AREVA’s mining contracts expire

About 19% of France’s electricity relies on uranium from AREVA’s two Niger mines, according to the Voice of America. Yet the nuclear giant’s 10-year contracts with Niger expired in December. Now, Reuters reports, the country wants a radically revised royalty regimen.

AREVA has just resumed production after a mid-December suspension attributed to maintenance by the company but to negotiating tactics by its critics. Reuters listed several substantial benefits and exemptions that the expired contracts had granted AREVA and which the current government opposes. Moreover Nigerian officials are talking about raising royalties as high as 12%.

By comparison, Reuters stated, most Australian states charge only 5% but Saskatchewan gets 13% and in Kazakhstan “the official rate is 18.5%.”

Reuters quoted Niger mining minister Omar Hamidou Tchiana saying, “For 40 years, Niger has been one of the world’s largest uranium producers, but it’s still one of the poorest countries on the planet. At the same time, AREVA has grown to be one of the world’s largest companies. You see the contrast?”

AREVA counters that uranium’s lowly price can’t meet Niger’s expectations. The company holds a 63.6% interest in the two mines, with the rest held by a state agency. And although France owns a majority stake in AREVA, the Guardian reports that French development minister Pascal Canfin “has called Niger’s requests ‘legitimate.’”

Reuters pointed out Niger’s “turbulent political history marked by rivalries and coups, and even though [President Mahamadou Issoufou’s] government has made progress in tackling corruption, the country still ranks 106th out of 177 countries in Transparency International’s annual corruption perceptions index.”

The country’s security problems create additional concern. In October four AREVA employees in Niger were released after being held hostage for three years by Al Qaeda-linked terrorists. Last May one employee was killed and 14 injured in a terrorist attack on AREVA’s Somair operation. “The region is now crawling with military,” according to Reuters.

See previous uranium news updates:

Read analyst David Talbot’s insights about uranium and the Athabasca Basin in a global context.

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